Japan stimulus package passes lower house

The lower house of parliament passed an extra budget of 4.4 trillion yen ($53 billion yen). Cost cuts and frontloading of public works projects will finance the remainder of Prime Minister Naoto Kan's stimulus plan.

The package includes financial support for small businesses and spending to boost local economies. The government estimates it will help lift the nation's gross domestic product by 0.6 percentage point.

Japan's economy expanded at an annualized pace of 3.9 percent in the third quarter, but all signs point to a rapid deceleration in the current quarter. Slowing exports and a persistently strong yen are taking their toll, while deflation is keeping a tight grip on the world's No. 3 economy.

The budget now moves to the upper house, where it is expected to face stiff opposition. But a rejection would be more symbolic than anything else. Budget legislation passed by the more-powerful lower house becomes law within 30 days even if its voted down by the upper house.

Still, any delay would add to Kan's list of woes amid growing public anger over recent diplomatic spats with China and Russia.

The supplementary budget was expected to clear the lower house Monday, but lawmakers were instead caught up in heated debate over Kan's handling of leaked video footage of a collision between a Chinese fishing boat and Japanese patrol vessels near disputed islands. The incident led to strained tensions between China and Japan and triggered nationalistic protests in both countries.